Five highlights from the Economy, Jobs and Fair Work Committee's inquiry into the pay gap

Yesterday, Close the Gap welcomed the report of the Scottish Parliament Economy, Jobs and Fair Work Committee inquiry into the gender pay gap. The report No Small Change: The economic potential of closing the pay gap makes 45 recommendations, a number of which are refreshingly bold, to Scottish Government, its agencies, and employers. That the Committee undertook the inquiry is progress itself as the pay gap has hitherto been seen as the purview of equality committees. Increasingly though, the economic case for women's equality is gaining global traction. In 2016, Close the Gap published research which found that equalising men's and women's employment could be worth £17bn to Scotland's economy. The committee led with this figure for the comms around their report.

Perhaps most crucially, the report recognises that to reduce the pay gap, action is required not only in labour market policy, but across a range of policy areas and makes recommendations around education, skills, childcare, procurement, business support and economic development policy and delivery. This is an important acknowledgment because history has shown us that tinkering around the edges of a systemic problem doesn’t create change. That’s why we’ve particularly welcomed the recommendation that Scottish Government develop a national strategy, the key ask from Close the Gap and Engender.

Although a range of committees, commissions and summits have looked at the gender pay gap, and women’s labour market inequality, recommendations have been short-term, fragmented and very often not implemented. The pay gap is a structural problem and yet there's never been a cohesive, strategic response which aims to address the systemic inequality that groups of women experience at work.

Here’s five highlights from the committee's report.

1. The undervaluation of the care sector

The report highlights the systemic undervaluation of the female-dominated care sector and its workers. The undervaluation of women’s work is an economy-wide problem, and a key cause of occupational segregation. The committee notes that the care sector is an “undervalued but growing and central part of Scotland’s economy”, and “recognises the impact that improving pay in child, adult and elderly care would have not only on reducing the gender pay gap but also on recruiting a more balanced workforce”. It recommends increasing wages in care beyond the living wage to more accurately reflect the value of the work undertaken. Furthermore, in order to raise the status of care, the committee recommends that as a first step, Scottish Government should make care a “priority” sector. This is significant because Scotland's current growth sectors are male-dominated, and consequently it's men, and men's jobs that have benefited from investment, and budget allocation.

2. Scottish Business Pledge, and the enterprise agencies

Close the Gap set out in its written and oral evidence its concerns about the Business Pledge, a voluntary initiative which aims to influence businesses to take up a range of progressive workplace practices, including improving gender equality. The critique of the “balanced workforce” indicator offered by Close the Gap, Engender and Equate Scotland (that it ignores occupational segregation, among other things) was accepted by the Committee, and it recommended that the gender element of the Pledge be redesigned in consultation with gender advocates. This is very welcome, particularly as the most recent statistics shows a further drop in the proportion of companies signing up to the gender pledge, now just 33%. The Pledge just isn’t working for women’s equality.

The committee makes a range of recommendations around economic development policy and delivery, and are critical of the inertia of the enterprise agencies around the pay gap. The committee reports that it is “not persuaded the enterprise agencies are as fully committed to promoting the SBP as they might be” and that it “expects to see inclusion of ambitious targets and gender pay measures within future business plans”. The lack of engagement of the enterprise agencies on equalities has long been of concern to Close the Gap, so we’re pleased to see a raft of recommendations in this area. For example:

  • All Scottish Enterprise and Highlands and Islands Enterprise account managed companies to have or produce a gender pay gap report and action plan.
  • Businesses who receive significant support, such as Regional Selective Assistance grants, should be asked to have or produce a pay gap report and action plan for their Scottish operations.
  • A question on the pay gap should be added to Regional Selective Assistance application forms to align with Invest in Youth conditionality.
  • Scottish Government to require enterprise agencies to report on the work they are doing with account managed companies to reduce the pay gap, through their annual reports, and feed into the National Performance Framework indicator.

3. Measuring the pay gap

Scottish Government uses the median full-time figure as the pay gap indicator in the National Performance Framework. Close the Gap has been critical of this because it excludes about 40% of working women, those who work part-time. The committee agreed with Close the Gap on this measure, reporting it was “not persuaded this accurately or conclusively represents the pay gap”. Instead it recommends a suite of indicators to measure the pay gap, and that any National Performance Indicator indicator include part-time workers, who are predominantly women working in undervalued, low-paid jobs.

4. Procurement

The committee highlighted the potential to use procurement to lever better employer practice around the pay gap. It recommended that Scottish Government consider amending procurement regulations to require bidders to calculate and submit pay gaps using the formula in the new pay gap reporting regulations.

It further recommended that Government consider the opportunities for new procurement legislation that will be presented post-Brexit.

Close the Gap is currently reviewing public authority work on procurement and gender equality, as part of our assessment work on the public sector equality duty. We're also going to be doing some work in the future to take a closer look at how procurement can advance women's equality. In the meantime, you can read a working paper by Dr Katharina Sarter, formerly of Women in Scotland's Economy research centre at GCU, on public procurement and the public sector equality duty.

5. Occupational segregation: A cradle to the labour market problem

Occupational segregation is a cross-cutting theme of Close the Gap's work, so we welcome the committee’s acknowledgement that “a gendered analysis of education is key to tackling the gender pay gap”. Girls and boys and young men and young women are funnelled into different subjects based on stereotypes and gendered assumptions on their capabilities and interests, which is a major cause of occupational segregation. Our Be What You Want works aims to address this by working with education policymakers, practitioners, and young people to encourage non-traditional subject choices. The committee was clear that changes are needed in the education system, and is going to write to the Scottish Parliament Education and Skills Committee with their findings and ask them to consider the issue further in their future work. We’ll be looking at the inquiry findings around education in more detail on the Be What You Want blog later this week.

That's just some key highlights of what’s in the committee’s report. There are many more covering areas such as women's enterprise, equal pay reviews, Modern Apprenticeships, flexible working, returners programmes, and the new pay gap reporting regulations.

Grab a cup of tea, and read the full report. You can also read Close the Gap’s written evidence.

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